Sales (Articles 1542 - 1584)
Article 1542.
In sales involving real estate, the parties
may choose between two types of
pricing:
Unit price contract - the purchase price
is determined by way of reference to a
stated rate per unit area, buyer may
seek 2 options; proportional reduction of
price; right of rescission (ex. ₱1,000 per
square meter)
Lumpsum contract - there shall be no
increase or decrease of the price
although there be a greater or lesser
area or number than that stated in the
contract (ex. ₱1,000 for 1,000 square
meter)
Sales of real estate made for
lumpsum:
Mistake in area stated in contract
immaterial - if the sale is made for a
lumpsum, the cause of the contract is
the thing sold irrespective of its number
or measure
Where area or number stated together
with boundaries - if the vendor cannot
deliver to the vendee all that is included
within the boundaries mentioned in the
contract, the latter has the option to
reduce the price in proportion to the
deficiency or to set aside the contract
More or Less (implying that both parties
assume the risk of any ordinary
discrepancy)
The use of more or less or similar words
in designating quantity covers only a
reasonable excess or deficiency. A
vendee of land sold in gross or with the
description more or less with reference
to its area does not thereby ipso facto
(by the fact itself) take all risk of quantity
in the land.
Article 1543.
The actions based on Articles 1539 and
1542 for either rescission of the contract
or proportionate reduction of the price
must be brought within 6 months
counted from the day of the delivery.
Article 1544.
If the same thing has been sold to
different vendees;
(a) If it is a movable property, the
ownership shall be transferred to the
person who has first taken the
possession;
(b) If it is an immovable property, the
ownership shall belong to the person
acquiring it who in good faith first
recorded it in the Registry of Property;
(c) If there is no inscription, the
ownership shall pertain to the person
who in good faith was first in
possession; and, in absence thereof, to
the person who presents the oldest title,
a provided there is good faith.
The conflicting rights of said vendees
shall be resolved in accordance with the
following rules:
Movable Property
(a) the vendee who first takes
possession in good faith
Immovable Property
(a) the vendee who first registers the
sale in good faith in the Registry of
Property
(b) in the absence of registration, the
vendee who first takes possession in
good faith
(c) in the absence of both registration
and possession, the vendee who
represents the oldest title (who first
brought the property) in good faith
First in time, stronger in right
The principle of primus tempore, potior
jure gains greater significance in case of
double sale of immovable property.
Purchaser in good faith
The one who buys property without
notice that some other person has a
right to or interest in such property and
pays its fair price before he or she has
notice of the adverse claims and interest
of another person in the same property.
Sales (Articles 1542 - 1584)
Article 1545.
Condition
- an uncertain event or contingency on
the happening of which the obligation of
the contract depends (in case of non
fulfillment condition)
- in such a case, the obligation of the
contract does not attach until the
condition is performed
- goes into the root of the existence of
the obligation
- must be stipulated by the parties in
order to form part of an obligation
- although it may extinguish the
obligation upon which it is based, it
generally does not amount to a breach
of contract of sale
Condition imposed on perfection of
contract
- it prevents the juridical relation from
coming into existence
Condition imposed on performance of
obligation
- it gives the option to the party either to
refuse or proceed with the contract of
sale and waive the condition
Article 1546.
Warranty
- statement or representation made by
the warrantor or the seller of goods
regarding the existence or accuracy of
specific facts or the condition, quality,
quantity, or nature of a good or property
- goes into the performance of such
obligation and in fact may constitute an
obligation itself
- may form part of the obligation or
contract by provision of the law without
the parties having agreed thereto
- non fulfillment of a warranty would
constitute a breach of contract
Warranties by the seller may be express
or implied. A warranty is a part of the
contract of sale. It is immaterial whether
the seller did not know that it was false
or true. No intent is necessary to make
the seller liable for his warranty.
Express warranty
- an agreement by a seller to provide
repairs or a replacement for a faulty
product, component, or service within a
specified time period
- under the Magnuson-Moss Warranty
Act, a company that provides a written
express warranty must adhere to federal
guidelines
- details about a product or service that
are outlined in an advertisement can set
the precedent for an express warranty
- in the absence of communicated
guarantees, an implied warranty may
come into force
Article 1547.
Implied warranty
- an assurance that a product is fit for its
intended purpose and meets the buyer's
expectations
- can be written or oral
- governed by state laws, not federal
laws
- two key types of implied warranties are
merchantability and fitness
- merchantability says that a product will
meet reasonable expectations of the
buyer, while fitness means the product
meets the buyer’s intended use
What is implied?
- suggested but not directly expressed
What is warranty?
- a written guarantee, issued to the
purchaser of an article by its
manufacturer, promising repair or
replace it if necessary within a specified
period of time
What is implied warranty?
- it is an obligation imposed by law when
there has been no representation or
promise; especially, a warranty arising
by operation of law because of the
circumstances of a sale, rather than by
the seller’s express promise
Examples of implied warranties:
- Warranty that the seller has a right to
sell;
- Warranty against eviction;
- Warranty against non-apparent burden
or servitudes;
- Warranty against hidden defects;
- Warranty against redhibitory defects
on animals
Consumer products and services
- goods, services and credits, debts and
obligations for personal, family,
household or agricultural purposes,
which shall include but not limited to
foods, drugs, cosmetics, and devices
Sales (Articles 1542 - 1584)
Consumer products with warranty:
a. Terms of express warranty - any
seller who gives an express warranty
shall:
i. set forth the terms warranty in clear
and readily understandable and clearly
identify himself as the warrantor
ii. Identify the party to whom the
warranty jd extended
iii. State the products/parts covered
iv. State what the warrantor will do in the
event of defect, malfunction to conform
(comply with rules, standards, laws) to
the written warranty and at whose
expense
v. State what the consumer must do to
avail of the rights which accrue (result,
arise) to the warranty; and
vi. Stipulate (demand/specify as part of
an agreement) the period which after
the notice of defect, malfunction to
conform to the warranty, the warrantor
will perform any obligation under
warranty
b. Express warranty - all written
warranties issued by a manufacturer
shall be operative from the moment
of sale
i. Sales Report - all sales made by
distributors of products covered by this
article shall be reported to the
manufacturer or producer of the product
sold within 30 days from the date of
purchase unless otherwise agreed
upon. The report shall contain:
■ the date of
purchase
■ Model of the
product bought
■ Serial numbers
■ Name and address
of the buyer
(The report made shall be equivalent to
a warranty registration with the
manufacturer/producer; such
registration is sufficient to hold the
manufacturer/producer liable, in
appropriate cases, under warranty)
Article 1548.
Eviction
- the juridical process whereby the
vendee is deprived of the whole or part
of the thing purchased by virtue of a
final judgment based on a right prior to
the sale or an act imputable to the
vendor
- represents the loss of the property or
disturbing the buyer in the exercise of
his ownership rights or another
transmitted right, resulting from the sale
of a right to a third party, which excludes
fully or in part, the right of the buyer.
In order that a vendor’s liability for
eviction may be enforced, the following
requisites must concur:
(a) there must be a final judgment
(b) the purchaser has been deprived of
the whole or part of the thing sold
(c) said deprivation was by virtue of a
right prior to the sale made by the
vendor
(d) the vendor has been summoned and
made co-defendant in the suit for
eviction at the instance of the vendee
Warranty against eviction
- the seller warrants the buyer against
eviction, which is the buyer's loss of, or
danger of losing, the whole or part of the
thing sold because of a third person's
right that existed at the time of the sale
Types of eviction:
(a) total - where the vendee is deprived
of the whole if the thing purchased
(b) partial - where the vendee is
deprived of part of the thing purchased;
deprived of some items that were jointly
sold with other items
Warranty is not an essential element of
a contract of sale and may be
increased, diminished, or suppressed by
agreement of the parties. Any stipulation
exempting the vendor from the
obligation to answer for eviction shall be
void if he acted in bad faith.
Article 1549.
Case is brought before a higher court for
review of the decision of a lower court
The vendee’s right against the vendor is
not lost because the vendee did not
appeal. With a judgment becoming final
whatever be the cause of finality, the
requirement of the law is deemed
satisfied.
Sales (Articles 1542 - 1584)
Article 1550.
Prescription
- effect of the lapse of time in creating
and destroying rights
- one acquires ownership and other real
rights through the lapse of time in the
manner and under the conditions
prescribed by law; in the same way,
rights and actions are lost by
prescription
(a) completed before sale - vendee may
lose the thing purchased to a third
person who has acquired title thereto by
prescription
(b) completed after sale - even if
prescription has started before the sale
but has reached the limit prescribed by
law after sale, the vendor is not liable for
eviction
Article 1551.
If the vendee is deprived of the
ownership of the property because it is
sold at public auction for nonpayment of
taxes due from the vendor, the vendor is
liable for eviction for an act imputable to
him.
Article 1552.
No need to state the warranty of eviction
because it is implied to the registry
Judgment debt
- debt that is evidenced by a legal
judgment or brought about by a
successful lawsuit against the debtor
- a sum of money that a court of law has
ordered a company or person to pay
Juridical sale
- sale conducted under the authority of a
judgment or court order, such as an
execution sale
- the court will issue a writ of execution,
and a court officer, usually a sheriff in
the county where the property is
located, will take the judgment debtor's
money or property to pay the creditor; if
there's not enough cash, the court will
sell the debtor's property to pay the debt
Article 1553.
The buyer can waive the obligation of
the vendor to answer for eviction.
However, the said stipulation is void if
the vendor acted in bad faith.
Effects of vendor’s bad faith
- if the vendor after selling his property
to another, sold it again to another
purchaser, he cannot, even by
stipulation, be exempt from warranty
against eviction because he acted in
bad faith
Effects of vendee’s bad faith
- if the vendee knew the defect of the
title at the same time of sale, he cannot
claim that the vendor has warranted his
legal and peaceful possession of the
Mproperty sold
Article 1554.
Two kinds of waiver:
Consciente - voluntarily made by the
vendee without the knowledge and
assumption of the risks of eviction
If the waiver was only conscious, the
vendor shall only pay the value which
the thing sold had at the time of eviction.
Intencionada - made by the vendee with
knowledge of the risk of eviction and
assumption of its consequences
If the waiver was intentional, the vendor
is exempted from the obligation to
answer for eviction provided he did not
act in bad faith.
Article 1555.
(a) return of value of thing - if at the time
of eviction the value of the property is
more or less than its value at the time of
the sale, by reason of improvements or
deterioration, it is but just that the
vendor should pay the excess or not
suffer the damages
(b) income or fruits of thing - vendee is
liable to the party who won the suit
against him, only if so decreed by the
court
(c) cost of the suit - vendee is entitled to
recover the expense of litigation
resulting in the eviction, including the
cost of the action brought against the
vendor to enforce his warranty
(d) expenses of the contract - in the
absence of any stipulation to the
contrary, the expense in the execution
and registration of the sale are borne by
the vendor; if the vendee should have
paid for such expenses, he shall have
Sales (Articles 1542 - 1584)

the right to demand the same from the

vendor
(e) damages and interests - the right of
the vendee to demand damages and
interests and ornamental expenses is
qualified by the condition that the sale
was made in bad faith; if good faith is
presumed, the vendee is not entitled to
recover damages

Rescission is not a remedy in total

eviction. Rescission contemplates
mutual restitution, meaning both parties
must be able to return whatever they
received under the contract. However, in
total eviction, the vendee cannot return
the object of the contract of sale.

Article 1556.

This article contemplates partial

eviction. It states the rule that if there is
partial eviction, the vendee has the
option either to enforce the vendor’s
liability for eviction or to demand
rescission of the contract.

In case the vendee is totally evicted

from the thing sold, he cannot avail the
remedy of rescission, because this
remedy contemplates that the one
demanding is able to return whatever he
has received under the contract.

Article 1557
The warranty cannot be enforced until a
final judgment; whereby the vendee
losses the thing acquired or a part
thereof

What is final judgment?

- a court’s last action that settles the
rights of the parties and disposes all
issues in controversy, except for the
award of costs and enforcement of the
judgment

Article 1558

The vendor shall not be obliged to make

good the proper warranty, unless he is
summoned in the suit for eviction at the
instance of the vendee

Article 1559

The defendant vendee shall ask,

within the time fixed in the Rules of
Court for answering the complaint, that
the vendor be made a co-defendant